ECONOMY

Property auctions on market rates, not on objective values

property-auctions-on-market-rates-not-on-objective-values

The government has pledged to extend protection of taxpayers’ primary residences up until the end of the year, while a new bill on the civil procedure code dictates that house auctions will be based on the market value of properties.

To date, foreclosures were conducted on the basis of so-called objective values – property rates used for tax purposes – though these overwhelmingly tend to be significantly higher than going market rates due to the decline of prices since the start of the financial crisis.

Changing this premise is part of an effort to resolve a problem seen in the past few years, when the vast majority of property auctions ended without a buyer. The new measure is expected to accelerate the collection of revenues by tax authorities and banks, which have thousands of properties in their possession as a result of mortgages that have gone bad. Tax authorities have also missed out on major revenues as properties belonging to major debtors that were repossessed were unable to find buyers.

The government on Tuesday announced the de facto protection of the main residence from foreclosure until the end of 2015, while also promising decisive measures to deal with the issue of nonperforming loans before January 1.

A few hours after this announcement, the Hellenic Bank Association issued a statement further confirming that all banks operating in Greece will continue to offer protection to primary residences up to the end of the year based on the previous legal framework, dating from 2013.

Critics say that these are moves intended to appease the public after it had been falsely suggested that the bill due to be voted through Parliament on Wednesday would lift all obstacles to foreclosures.